Question
Bruce also requires a calculation of taxable income for the most recent year ended December 31, 2019. The calculation should be prepared in Excel. He
Bruce also requires a calculation of taxable income for the most recent year ended December 31, 2019. The calculation should be prepared in Excel. He has also requested that you prepare the year-end journal entry for taxes payable using a marginal rate of 14% on income less than the small business deduction. Bruce has provided you with the draft statement of income and retained earnings (Appendix II) and additional information you will need (Appendix III).
Appendix II Quality Cabinets In Statement of income and retained earning For the period ended December 31 (Draft)
| Current year | Prior year |
| (Draft) | (Audited) |
Sales | $ 8,959,800 | $ 8,834,000 |
Cost of sales | 5,949,648 | 6,129,709 |
Gross profit | 3,010,152 | 2,704,291 |
Expenses: |
|
|
Advertising and promotion | 357,900 | 266,500 |
Amortization | 219,163 | 166,584 |
Automobile | 140,800 | 102,600 |
Bad debts | 17,250 | 19,110 |
Donations | 1,200 | 1,000 |
Dues and fees | 7,500 | |
Insurance | 69,600 | 57,200 |
Interest and bank charges | 119,203 | 46,600 |
Office | 101,200 | 108,700 |
Professional fees | 67,700 | 34,800 |
Property taxes | 44,700 | 40,900 |
Repairs and maintenance | 207,100 | 155,100 |
Rent expense | 84,654 | |
Salaries and wages | 1,160,460 | 1,175,600 |
Travel | 117,666 | 103,900 |
Utilities | 67,600 | 60,200 |
Warranty | 72,059 | 69,482 |
Income before taxes | 154,397 | 296,015 |
Income taxes (Note 1) | 70,000 | 76,754 |
Net income | 84,397 | 219,261 |
Retained earnings, opening | 2,571,214 | 2,360,953 |
Dividends | 48,750 | 9,000 |
Retained earnings, closing | $ 2,606,861 | $ 2,571,214 |
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